If the Government Can Borrow Unlimited Amounts of Money, Why Do We Still Pay Taxes?

What’s a trillion dollars, or two, or 10, among friends? The U.S. government appears to be able to borrow any amount it wants without an adverse effect.

If this is true, if federal deficits don’t matter, then why do we bother with taxes?  According to economist Stephanie Kelton, who supports modern monetary theory, we need taxes to take dollars from citizens when inflation runs hot, and to punish people who do things we don’t like, such as smoking.

Specifically, Kelton likes that taxes “remove dollars from our hands, so we can’t spend them,” leaving more purchasing power for the government. So taxes make the people poor, and that’s a selling point to her, presumably because she thinks governments are really good at lifting people out of poverty. Anybody who’s spent time in America’s inner cities, where government money is pretty much the only money, might disagree.

Ah, but it’s not just about spending our money more wisely than we ever could, Kelton adds two secondary reasons she loves taxes: to punish particular people by redistributing their money, and to punish people for doing things she doesn’t like such as failing to buy energy-efficient appliances (no, really).

In other words, social engineering with carrots for your friends and sticks for your not-so-friends.

With our government giving away trillions of dollars and, along the way, picking winners and losers, what’s the worst that could happen?

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Comments (4)

  1. PaulM

    Actually, this is a brilliant argument and makes perfect sense. Kudos to the author of this article. And for further thought: Ever since 1949, there have been over 67 new taxes applied to the average working stiff. Scandalous. During the Civil War Congress passed the Revenue Act of 1861 which included a tax on personal incomes to help pay war expenses. It was repealed 10 years later. Guess what folks, it’s back and in spades. If the Government stuck to selling bonds only, it could clear it’s debt load in 10 years, easily.

  2. GS

    The rubber band can only be stretched so far.

  3. MaTeZaSa

    Taxation is already distributing the money fairly by taxing more those who earn more and less to those who earn less. Businesses need to deduct their losses or no one will go into business and more unemployment will happen. The sad part is when taxation never stops even for social security recipients, no thanks to then Sen. Biden who got SS taxed where it used to be free of taxes. Seniors on SS are barely surviving when they earn LESS than a welfare recipient who don’t pay for Medicare, housing and food stamps. Politicians are blind to this fact, and with Biden’s new tax increases, I guess all retirees will just have to die?

  4. gerald

    Why do you think bidin and his Treasonous democrats do just exactly what china tells them to do, they are all bought and paid for and owned by china, why do you think these Traitors want to take our guns and all our other freedoms, So that china can move in and take America and not only make us Slaves to their will, but they will also commit gynecide on every American that doesnt bow down to them. Americans have to stand up to these Traitors

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